Several Chinese news outlets, including those owned by the government, reported that users of the Alipay app can now use the Chinese central bank digital currency (CBDC), the digital Yuan.

Alipay is the world’s largest digital wallet, with over a billion users. Although the e-CNY feature is not open to all, it is available to many Alipay users as the digital currency is still in its early stages.

Even though the CBDC wallet has an anonymous version, it appears it would be a weak substitute for digital cash due to its restricted features, as discussed later.

We announced that China had increased the number of users and pilot locations for the digital currency, or DC/EP, from four to ten cities, including the Winter Olympic venues.

Until now, the wallets were only available from the six state-owned banks. Alipay and MyBank, owned by Ant, are now operational, and WeBank, a Tencent subsidiary, is expected to launch shortly.

As a result, these are the first non-government wallets to go online.

According to a report by China Business News, the current bank account connection with Alipay cannot add digital currency. Instead, the digital Yuan must be directly allowed in a bank account.

“So many people are still reluctant to get digital yuan.”

Beijingers are getting a taste of China’s digital currency before a wider roll-out during the #Beijing2022 Winter Olympics. But it’s competing with giants Alipay and WeChat for consumers’ attention. Via @Quicktake pic.twitter.com/xKBQ3B7NeK

— Bloomberg Crypto (@crypto) September 15, 2021

Unidentified Wallets have Bounded Utility.

Wallets for digital currency come in various shapes and sizes, depending on the level of identity verification needed. The anonymous version of Alipay can only be used for retail transactions and not P2P transfers.

We assume this is to keep it from being used for malicious purposes. Since the retailer maintains a transaction log, retail purchases are theoretically traceable.

On the other hand, transferring money to another individual necessitates authentication, which ensures that any person-to-person payment would be recorded if actual cash is lost.

These privacy concerns are the most severe impediment to CBDC adoption worldwide, not just in China.

In the meantime, the Alipay and WeChat Pay wallets help offline digital currency payments.

Three of Alibaba’s food-related apps are now available as sub wallets inside the digital RMB app. Food delivery service ele, Hema New, and Tmall Supermarket is among them. Alipay is an affiliate of Alibaba.

Sub wallets are designed to limit e-commerce outlets’ access to personal data by restricting the amount of information they may gather from payments.

Separately, IDEX Biometrics, a Norwegian company, announced yesterday that it had agreed with Chutian Dragon to develop fingerprint-enabled cards to support the DC/EP.